Financial literacy is one thing each and every person needs to have under their belt. Not only does understanding financial concepts give you a better handle on your finances, it also allows you to have more choices in the way you live your life.
The fact of the matter is that money is important and very necessary for living in our modern society. There’s nothing wrong with money, but not understanding how it works and how to navigate the financial landscape can have some pretty serious and far reaching consequences. Come on and explore with journeytobillions the six financial concepts you can’t afford to miss before turning 30:
1. Credit Score and Report
Your credit report impacts your credit score. A credit report shows how much debt you have, timeliness of payments, bankruptcies, foreclosures and the like. Your credit score is a number that tells lenders how risky of an investment you are. A good credit score will get you lower/better interest rates, better credit card options and rewards, and less costly insurance premiums.
2. Kids Are Expensive
Children are a huge pull on your finances. They need medical insurance and doctor’s visits, clothing, shelter, shoes, lots of food, toys and entertainment, birthday parties, first cars, prom, college and so very much more.
3. Debt Management
Debt, even major debt, doesn’t have to be a life sentence. You can negotiate with lenders. You can budget your debt payment into your monthly expenses. Paying on smaller debts first, transferring credit card debt to a lower interest card and getting started paying off student loans ASAP are just a few things that can really help.
4. Negotiating is Vital
Whether you’re negotiating your salary, terms of employment, the price of a vehicle or your cable bill, knowing how to advocate for yourself financially is a must. And being willing to walk away from a deal that is not going to be in your best interest is something you should be prepared to do.
When you budget your money, you have the ability to know exactly what’s coming in and what’s going out. Budgeting makes it a lot easier to save for emergencies, vacations, a wedding and whatever else you need. Budgeting is the proper preparation that can save you from financial ruin.
6. 401k Management
It’s never too early to think about retirement. Here are three takeaways for managing your 401k: maximize your contributions, minimize fees, and diversify your investments. If you keep these things in mind, you are well on your way to saving for your retirement. Remember that it’s not an emergency fund, build that separately. There are taxes and penalties attached to cashing out that can cost you far more than what you put in.
You really don’t want to wait until you’re older to figure out how to responsibly handle your finances. The sooner you know, the better off you will be. But if you’re reading this and you find that you have lots to learn, that’s okay too. It’s never too late to gain financial literacy. It’s a beautiful thing.
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*Photos by Karolina Grabowska